Anjali Sharma
GG News Bureau
WASINHGTON, 8th April. Head of the International Monetary Fund Kristalina Georgieva on Friday warned that the global economy is heading for the weakest period of growth since 1990 as higher interest rates set by the world’s top central banks drive up borrowing costs for households and businesses.
Kristalina Georgieva said that a sharp slowdown in the world economy last year after the aftershocks of the Covid pandemic and the Russian invasion of Ukraine would continue in 2023, and risked persisting for the next five years.
She said that the global growth would remain about 3 per cent over the next five years – its lowest medium-term growth forecast since 1990, ahead of the IMF spring meetings next week.
Georgieva said that “This makes it even harder to reduce poverty, heal the economic scars of the Covid crisis and provide new and better opportunities for all.”
She noted in a downbeat assessment as the world struggles with the worst inflation shock in decades, the economic activity was slowing across advanced economies in particular. While there was some momentum from developing nations – including China and India low-income countries were also suffering from higher borrowing costs and falling demand for their exports.
Georgieva said global growth in 2022 had collapsed by almost half since the initial rebound from the Covid pandemic in 2021, sliding from 6.1 per cent to 3.4 per cent, ahead of the IMF publishing revised economic forecasts next week.
She said with high inflation, rising borrowing costs and mounting geopolitical tensions, global growth was on track to drop below 3 per cent in 2023 and remain weak for years to come.
It added that 90 per cent of advanced economies would experience a decline in their growth rate this year with activity in the US and the eurozone hit by higher interest rates.
Ms. Georgieva said that comparing the challenge to “climbing one ‘great hill’ after another”, there were still more problems to overcome: “First was Covid, then Russia’s invasion of Ukraine, inflation and a cost of living crisis that hit everyone.”
“So far, we have proven to be resilient climbers. But the path ahead and the path back to robust growth is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago,” she concluded in her re,marks ahead of the IMF summit in Washington DC.
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